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South American state wont be intimidated by ExxonMobil: Venezuela PDF Print E-mail
Monday, 11 February 2008

Agence France-Presse .

Caracas Venezuelan energy minister Rafael Ramirez said Friday that the South American state would not be intimidated by US energy giant ExxonMobil in a legal spat tied to the nationalisation of key oil fields. Ramirez spoke a day after ExxonMobil said it had won international court orders freezing 12 billion dollars in the worldwide assets of Venezuela s state oil firm, Petroleos de Venezuela (PDVSA), as it seeks compensation related to the nationalization push.

We will not be harassed in this way. It s an aggressive strategy, but we won t be intimidated, Ramirez told reporters. ExxonMobil, one of the world s largest oil companies, said it had won court orders in London, the Netherlands and Netherlands Antilles freezing PDVSA assets in those jurisdictions of up to 12 billion dollars. A New York court has also frozen 300 million dollars worth of the state oil firm s assets.

Ramirez denied that any of PDVSA s assets had been blocked. Its completely wrong to say they have been frozen, there has been no definitive decision, the energy minister said. Its a precautionary measure ... to which we have the right to respond, he said, adding that PDVSA was preparing its case before the court, where we feel certain we ll quash that measure.

PDVSA said it plans to file its appeal in court by the end of the month. The escalating legal fight pitches one of America s most powerful and wealthy corporations against the leftist government of Venezuelan president Hugo Chavez. Venezuela is also a member of the Organization of the Petroleum Exporting Countries (OPEC).

Ramirez said Venezuela would fight ExxonMobil s legal salvos and said the oil firm s actions would not affect PDVSA s operations. We are respectful of the courts and have faith in them, the energy minister said, adding of ExxonMobil, It s not possible to talk to them. The court orders will have a minimum impact on (PDVSA s) day to day operations, as well as its near term credit quality and financial flexibility, Fitch international ratings agency analyst Carlos Fiorillo told AFP by telephone.

The order in and of itself does not prevent PDVSA from transacting business, and from a practical perspective transferring assets, given its total consolidated asset base of more than 92 billion dollars, he added. ExxonMobil, which is based the US state of Texas, has sought compensation from Venezuela through international arbitration after pulling out of the country when the Orinoco oil fields were nationalized and it lost its stake in sizeable oil projects.

Chavezs government approved a law in June of last year forcing multinationals to transfer at least 60 per cent of the capital in their Venezuelan operations to PDVSA. ExxonMobil and rival US company ConocoPhillips both refused and withdrew from Venezuela, which supplies significant oil shipments to the United States. Ramirez said new contracts associated with the oil fields nationalization could not be addressed through international arbitration. Chavez has said Caracas would pay compensation to the multinational companies based on the book-price for the nationalized assets, and not on current market prices.

ExxonMobil has plenty of cash to wage an international legal contest. Earlier this month it reported the biggest annual profit in US corporate history of 40.6 billion dollars for 2007, largely due to surging crude oil prices. The oil firm has been seeking international arbitration through the International Center for Settlement of Investment Disputes (ICSID), an autonomous body within the World Bank which works to resolve disputes between governments and foreign private investors.

While ExxonMobil opted to launch a legal battle, other foreign energy companies, including France s Total, Norway s Statoil and British energy firm BP, accepted the Venezuelan government s terms for maintaining their operations in the country.

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